Japan and South Korea are expected by their respective meteorological agencies to see higher-than-average temperatures for the last week of August and the first three weeks of September.

The warmer weather at the tail-end of summer could offer some relief to LNG sellers that have struggled to offload cargoes — some of whom have even resorted to float their cargoes on the water without firm destinations.

Spot LNG prices have continued to track at three-year lows as the region emerges from a mild-winter in a severely oversupplied market. As of Wednesday, the cumulative JKM average for September was $4.321/MMBtu. But prospects of above average temperatures could give some support to power demand and in turn bolster spot LNG prices.

Japanese end-users like Tohoku Electric, Kansai Electric and JERA have dipped into the spot market this month for prompter deliveries as higher summer temperatures reduced inventory levels.

In Japan, the Japanese Meteorological Agency’s most recent forecast expects above-average temperatures for the entirety of the country from August 17 through September 16, with most provinces seeing a 50% or higher probability of warmer-than-average weather.

The most recent one-month temperature outlook from the Korea Meteorological Administration expects warmer-than-average temperatures for much of South Korea from August 26 through September 22.

Through August thus far, temperatures in both Japan and South Korea have tracked above the historical average, with The Weather Company data showing Japan pacing 0.8 degrees Celsius above average month to date, and South Korea 0.4 degrees above average levels, a change from July, where both countries experienced below-average temperatures.

Tropical systems in the Western Pacific have been active, with the JMA showing Severe Tropical Storm Krosa making landfall August 15 in Southwestern Japan at the Kochi and Ehime provinces, while also impacting Yamaguchi, Hiroshima and other provinces in the vicinity, bringing with it heavy rainfall and strong winds. Krosa’s landfall could bring a stint of decreased demand, as typhoons historically bring cooler weather to impacted areas.

The weather in northeast Asia has an impact on consumption of LNG, coal, crude oil, fuel oil and LPG, which are used for thermal power generation.
Source: Platts